Stock Analysis & Ideas

Cheers! 2 Wine Stocks to Cherish the Holiday Spirit

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With a steady growth runway ahead, Constellation Brands and Vintage Wine Estates are two wine stocks that should be a part of your holiday purchases to help your portfolio age like fine wine.

There are still a few days to go before the Yuletide is over and we go back to the daily grind. With the enthusiasm still on, we turn our attention to the wine industry, whose products complete the holiday spirit and whose stocks can keep your portfolio happy. As there aren’t many pure-play wine producers and most good companies have a portfolio of various alcoholic beverages, I have picked two promising stocks dabbling in wine, and various other distillates. Constellation Brands (NYSE:STZ) and Vintage Wine Estates (NYSE:VWE) are two wine stocks that will keep your portfolio merry through the challenges of 2023 and beyond.

Constellation Brands

77-year-old alcohol producer Constellation Brands is the owner of popular beer, wine, and spirits brands including Corona beers, the Robert Mondavi brand of Cabernet Sauvignon wine, SVEDKA Vodka, Casa Noble Tequila, and High West Whiskey.

In its last reported quarter, the company reported earnings and sales beats for the fourth straight quarter, thanks to solid demand for its portfolio of premium, high-end products.

Does STX Pay a Dividend?

Constellation’s commitment to providing enhanced shareholder returns over the long term through share repurchases and dividends is noteworthy. In October, the company announced a quarterly dividend of 80 cents per share for Class A stock and 72 cents for Class B stock. The company’s dividend payout ratio of 27.91% means 27.91% of net income is returned as dividends, which is impressive.

Although its wine and spirits segment has been lacking some luster lately, its beer segment is likely to pull the company through 2023 without compromising shareholder returns.

Deutsche Bank analyst Steve Powers expects Constellation’s Q3 results (due on January 6, 2023) to come slightly above consensus, driven by continued momentum in the beer segment.

Bulls are running for STX stock on Wall Street. The stock has a consensus rating of Strong Buy based on nine Buys and two Holds. The average price target of $276.64 indicates a stock price appreciation of around 19% in the next 12 months.

Vintage Wine Estates

Vintage Wine Estates, an international producer of wines and craft spirits, is one of the top wine stocks to consider for 2023 and beyond. In its last reported quarter, the company posted earnings and revenue beats on the back of ample demand. The company’s business strategy involves traditional wine distribution, along with an online direct-to-consumer home delivery segment.

Cowen analyst Vivien Azer thinks that Vintage Wine can outperform the wine category despite macroeconomic challenges, and gain market share during the low-demand period on the basis of affordable pricing.

Remarkably, shares of VWE worth around $266,200 were bought by corporate insiders in November through December, indicating a Very Positive insider confidence signal on TipRanks.

Wall Street is split in its opinion about VWE stock, with a Moderate Buy consensus rating based on one Buy and one Hold rating. Analysts believe that the stock price can go up to $3.25 on average over the next year, indicating a growth of 2.52%.

Takeaways: Happily High Prospects

The wine industry is not only for the elite anymore and is a mature industry for a product that has been enjoyed for hundreds of years. Moreover, it is unlikely that the broader alcoholic beverage sector will ever lose its shine.

Future Market Insights research reveals that the global wine market is expected to reach $513.8 billion in 2022 and grow at a CAGR of 5.1% over the next decade. Moreover, according to Verified Market Research, the market size of alcoholic beverages was $1471.7 billion in 2021 and is expected to grow at a CAGR of 2.51% between 2022 and 2030 to reach $1795.3 billion.

Though this is not a sector with rapid and exponential growth prospects, the wine and other alcoholic beverage industries present remarkable opportunities for long-term investment.


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